Should the sole recipient of an estate be the executor too?

Q. I am 68-years-old and in good health, and am planning to leave my money to my grandson. He is 20 years old, very good with money, and has common sense. I had asked my son to be the executor of my will but that was before I decided to leave my money to my grandson. I have now decided to leave both of my two sons out of my will (the second son has no children). I want to name a new executor. Who could I name as a backup?

— Thank you, Grace

A. Naming someone as an executor is an extremely important duty and carries a lot of responsibility. Under new rules that have been passed in the last year, the tax reporting and understanding of the assets in an estate is extremely important.

When deciding on whom you might name as an executor, there are several factors to consider. First, it makes sense to find someone who is younger than you. While this does not guarantee they will outlive you, it does increase the odds.  Ideally, you should look for someone who understands money, tax and does not get flustered by paperwork. Since this can be an intense issue that takes a substantial amount of time, ideally the person you choose will be retired or able to dedicate the substantial time commitment required to do the job.

Depending on the complexity of the items listed in the estate—and the amount of planning the deceased has done to make the burden a little bit lighter—the winding up of an estate can take more than a year. If the assets have to be probated you will want the person you appoint to understand the process and liability that they are accepting. Multiple tax returns and filings must be done at specific times.

There are banks that offer trust services, however, they are expensive and will take a portion of the estate as their fees until the last tax filing is completed.

Lawyer’s would be a good choice, however, it is not likely that you will find a lawyer who would like to take the liability and time involved to act as an executor.

People usually look to a family member who has either performed these duties in the past or are willing and knowledgeable enough to do things in a conscientious manner and follow through to the end. And the more estate planning done in advance, the easier it is for an executor.

Some people like to have two or more adult children act as an executor. This can also add a layer of complexity, first they must both be in absolute agreement on every issue, and second, they must both be available to make decisions and sign documents at the same time. This is rarely the case, as people take vacations or live in different cities, provinces or countries.

The bottom line? Make sure the person you are considering is aware of not only your intentions but also of the time commitment and process involved. An executor—if he is unhappy with the role—can ask the court to remove them, and then the estate is tied up for a very long time.

Debbie Hartzman is a certified financial planner and trust and estate advisor. For more articles by Debbie, go to: www.debbiehartzman.com

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